5 Ways To Automate Your Finances

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I‘m convinced that the one thing that could greatly improve finances for many people is also dead simple–automation.

Studies have shown, for example, that when an employer automatically signs up new employees to the company’s 401k plan, a greater percentage of employees participate in the plan. While many of these employees would not enroll in the retirement plan if left to their own devices, they apparently also won’t go to the trouble of canceling their enrollment when the employer takes the initiative.

Financial automation, moreover, has never been easier. With the internet transforming everything from online banking to investing, a fully automated financial life is a snap. Although some might still use traditional methods, there are ways to let our high-tech world do it all for us. We can automate virtually everything from our bills to our investments. By automating our finances we can spend less time managing our money and more time doing things we really want to do.

At the end of this article we ask the question “Should you automate?” Let us know what you think – is automating your fiances the lazy mans way of money management or is it good way to manage your money. Tell us what works for you and what doesn’t work.

Here are 5 ways to automate your finances:

Automate Bill Pay

Paying bills can be time consuming, but it doesn’t have to be. If you automate your bills you save yourself time and won’t have to worry about late fees. Most banks and credit unions offer this feature for free. Once you’ve set up online bill pay it’s easy to maintain. There are also other online services like Manilla.com that also offer free bill pay.

For monthly bills that let you pay by credit card (e.g., cell phone bill, utilities, cable), you can also set up automatic bill pay directly. We pay every bill we can this way, and use a rewards credit card to get the free points.

Automate An Emergency Fund

Having an emergency fund is an essential part of your financial stability. Even when you are in debt, you still need to put money into an emergency fund because this can keep you from accumulating even more debt. A great way to get started is by automating your savings. You can have money transferred right out of your checking account into a savings account each pay period. A high yield savings account is a great place to stash your cash.

Automate Retirement Investing

If you invest in a 401k through your employer, than you know it’s already automated for you because it comes directly out of your pay check before you even get paid. This works great because you don’t even miss the money. You can do the same thing when investing in an IRA. You can set it up so that your investment comes right out of your paycheck and goes directly into your IRA.

Automate Investments in Non-Retirement Accounts

You can automate your non-retirement accounts with sites like Betterment. Betterment is a website that allows investors to invest in the stock and bond markets through a basket of ETFs. I like this site because you don’t have to pick individual ETFs; instead, Betterment picks them for you based on the asset allocation you select. Once you sign up, you just link your checking account to Betterment. This gives you the option to set up a recurring contributions or just make a contribution whenever you see fit. That’s exactly what I’ve done, and I now invest $100 a month automatically with Betterment.

Automate Tax Prep

With Turbo Tax you can even automate your taxes. There is an Automated Tax Return feature built into Turbo Tax that allows you import last year’s tax information directly into this year’s taxes. On top of that, you can easily download directly into Turbotax much of the tax information you’ll need to complete your taxes (like W-2’s, for example). This makes data entry much more manageable and eliminates some of the pain brought on by tax season.

Take the 31-Day Money Challenge

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Bonus: You'll also get instant access to my interview of a husband and father who retired at the ripe old age of . . . 30. Seriously!

What others are saying: "Hi Rob. I'm at Day 26 in your 31 day money challenge podcast. Thank you, thank you, thank you! I've been looking for a comprehensive guide to all-things-money and this has been so informative." --Danielle

Agree with you that one of the things people should do more is to automate as many of their financial planning activities as possible. Regularly setting aside some money for investment and emergency funds is one big step to achieving long term financial security.

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